Palin: Corporate income tax is a very bad message for the economy

“The right tends to be very critical of it, both in terms of content and messaging, and it certainly doesn’t provide predictability in the economic environment,” Palin told ERR.

“It is still a groundbreaking moment in terms of Estonia’s competitiveness that income tax will be levied on companies again after 20 years. This is a very bad message for the Estonian economy, which has been in the worst condition in Europe and has been declining for more than two years,” Perrin commented.

Perrin said the right wing had proposed three conditions that were crucial in the coalition agreement. “First, it would make the cost-based state budget immediately visible, so that it would be possible to say which lines would save and which lines would increase defense costs. But this is not the case,” he said.

Perrin said if the coalition signed a central employers’ union economic agreement aimed at economic growth, it would show that the coalition saw the economy as a priority.

Palin also expressed doubts about the credibility of the Reform Party’s story.

“The Reform Party has also ‘temporarily’ raised income and VAT in the past,” Perrin said.

Palin said the negative state budget should be stronger and no one should go on summer vacation now.

“This is still a Reform-led government, so the level of specificity today should be on the table with a clear formula for budget cuts,
Go to where the indexing happens. The costs associated with indexing are in the hundreds of millions. Third, make it clear that the agreement must freeze the costs,” Perrin said.

“Of course, as the right has repeatedly said, the focus now still has to be on growth. Commercial peace has to be established. We wish there was already a list of specific bureaucratic norms that could be lifted,” he added.

Perlin believes that the increase in income taxes will push up inflation again. “People will have less money in their hands and people’s lives will be more difficult,” Perlin said.

“It’s exactly the same for companies. If income tax is introduced, the consequences are unpredictable. Who optimises how or who decides entirely to continue their business somewhere else. These are serious consequences,
It could be,” Perrin said.

Palin, however, favors delaying the elimination of the hump tax. “Basically, it’s a worthy idea. We’ve said that the whole tax hump issue should be delayed until the state budget is balanced,” Palin said.

“We still have to start with costs, because the problem in Estonia today is that our debt is growing at a crazy pace and we cannot stop our fixed costs. We have to deal with these. And of course, how to make this growth in Estonia long-term, permanent and faster than in neighboring countries,” Perrin added.